Act on the rational use of energy (known as the “Energy Conservation Act”) was enacted in 1979 (enforced in October 1979).The Act is the foundation of Japans’ energy efficiency and conservation policy. There has been a series of major revisions in 1993, 1998, 2002, 2005, 2008, and 2013. The target sectors are all major sectors in Japan, such as industrial, residential, commercial, and transportation. The Act of the legislation is as follows:

I. Energy Conservation Act in 1979

The initial enactment of the Act concerns the two key energy efficiency policy and measures as follows:- Energy Management and Conservation Regulation for Designated Energy Management Factories

The Act introduced energy conservation and management regulation targeting factories with a large amount of energy consumption. The factories were designated as “Designated Energy Management Factories (“Type 1 Designated Energy Management Factories”)” by this Act and under this Act. The level of fuel consumption of a designated factory was set at the volume of annual fuel consumption equivalent to at least 3,000 kilolitre of crude oil or an annual electricity consumption of at least 12 GWh. And regulatory standards called “Judgment of Standards” were developed for the designated factories to refer when practicing energy management requirements. The key energy conservation and management measures are as follows:- To appoint an energy manager (who is qualified as a national license);- To report the status of energy consumption every year. The Act also introduced energy efficiency standards for vehicles, refrigerators, and air conditioners.

II. Revision in 1993

The revision of the Act in 1993 adopts a mandatory periodic report to be made by the designated energy management factories.

III. Revision in 1998

The revision of the Act concerns the four key new energy efficiency policy and measures as follows:

1) Creation of “Type 2 Designated Energy-Management Factories”The revision of the Act introduced a new designation of factories and business establishments. These factories are “Type 2 Designated Factories” with an annual fuel consumption equivalent to over 1,500 kilolitres of crude oil or annual electricity consumption over 6 GWh. The factories became obliged to appoint an energy manager and monitor the actual status of energy use in the factory or workplace.

2) New Obligation for “Type 1 Designated Energy-Management Factories”For the "Type 1 Designated Energy Management Factory", a new obligation was introduced by the revision. As a new obligation, the submission of a medium- to long-term report on energy conservation measures was introduced. Also, “an average of 1 % reduction of energy intensity in annual base during the mid and long term plan” was introduced as a regulatory energy management and efficiency target.

3) Creation of Top Runner ProgramThe revision of the Act also introduced the “Top-Runner Program”. This is a regulatory standard program targeting the improvement of energy efficiency of electrical appliances. The concept of the program is that the target standard is set at the weighted-average energy efficiency of each manufacturer’s and importer’s shipment to achieve the level of the most energy-efficient model in each category of the current market.

4) Stricter Penalty for NoncomplianceAlso with this revision, the level of the penalties was increased for non compliance. New penalties were: a publication of the name of the manufacturers and importers and an issuance of the administrative order for not meeting the standards.

IV. Revision in 2002

The revision of the Act in 2002 concerns the key new energy efficiency policy and measures as follows:1) The category of the type 1 Designated Energy Management Factory that had targeted five manufacturing industries was expanded to all industries.2) The revision obliges the type 2 designated energy management factories to make periodic reports.3) The revision obliges the designated buildings to report energy conservation measures.

V. Revision in 2005

The revision of the Act in 2005 concerns the four key new energy efficiency policy and measures as follows:

1) Creation of Regulation for TransportationThe revision of the Act concerns the promotion of energy efficiency in the transportation sector, targeting consigners and carriers (transportation enterprises, for both goods and passengers, and goods owners) for the transportation sector. Regulated consigners and carriers are called “Designated Consigners and Carriers” and the set of obligations is as follows:- To submit a periodic report,- To promote eco-driving- To appoint an energy manager

2) New Concept of Total Management of Heat and ElectricityBy this revision of the Act, a new concept of management of energy source was introduced. Before, the amount of used energy of electricity and heat used was counted respectively, but after the revision total amount of the energy consumption of heat and electricity was counted.

3) New Obligation for Energy Supplier and RetailerBy this revision of the Act, a new obligation was introduced targeting equipment retailer. By this obligation, retailers became imposed on an information provision for consumers.

4) Unified Energy Conservation Label”A new labeling was introduced of which label shows a star-rating. This is a comparative performance rating labeling of a product with the cost information such as expected electricity cost during the use of the product.

5) Creation of Regulation for Housing and BuildingThe revised act strengthened energy conservation measures for residential buildings and the construction sector. Owners of buildings larger than 2,000 m2 floor space must prepare efficiency plans when applying for renovation permits, as must contractors planning to build entirely new structures. The reporting on maintenance and preservation of energy conservation measures to prefectures or other building authorization officials became mandatory.

6) Expansion of Top Runner ProgramNewly, microwave oven, electric rice cooker, and DVD recorder became the Top Runner target products.

VI. Revision in 2008

The revision of the Act in 2008 concerns the key new energy efficiency policy and measures as follows:

1) Industry and Commercial Sectors- The revision introduces a system for energy management obligation per whole enterprise.- The revision treats a franchise chain such as convenience stores and restaurants also as a single enterprise, and applies the same regulation on the enterprise. (This revision imposed not only on in manufacturing factories but also on business sectors such as offices, convenience stores, etc.)

2) Building, Houses- This review strengthen measures for large residences and buildings(Introduction of orders in addition to instructions and notices)- This revision adopts a report on energy-saving methods by owners of small-medium-sized residences and buildings above a certain size.- This revision adopts energy-saving measures by businesses engaged in the construction and sales of residences (recommendations and orders for those who are engaged in the construction and sales of a large number of residences).- This revision promotes of indication of the energy saving performance of residences and buildings.

VII. Revision in 2013

The revision of the Act in 2013 was conducted for the purpose of enhancing energy conservation measures in the housing and building sectors. The key measures are as follows:

1) Top Runner Program for Building Materials, etc.The Top Runner Program has so far been applied to machinery and equipment that consume energy. This revision newly adds building materials, such as windows and heat insulating materials as Top Runner Program target products. Also, three phase induction motor and LED lamp were included for the revision.

2) Positive Evaluation of Action to Reduce Peak Demand ElectricityThe current evaluation and rating system of the report submitted by designated energy management factories, etc., required by the Energy Conservation Act was amended. Under this new evaluation and ratings system, the procedure was revised to positively evaluate and rate the electricity consumer’ efforts to reduce the use of power from utility grids during peak demand hours by using storage batteries, energy management systems (BEMS or HEMS), or private power generation, in addition to their conventional measures to save energy.

3) Abolition of the Rational Use of Energy and the Utilization of Recycled ResourcesBy this revision of the Act, the "Energy Conservation and Recycling Assistance Act" was abolished, as it is defined in the Act, “the Act shall be abolished by March 31, 2013.” (Sunset Act).

VIII. Current development

In 2016, Japanese government has decided to introduce new energy efficiency measures. The key components of new measures are as follows:

1) Thermal power generation facilitiesIn order to improve efficiency of thermal power generation facilities, Japanese government set new Judgment of Standard for new power generation facilities and new energy efficiency benchmarks for electric power generation business.

2) SABC evaluation system (S rank, A rank, B rank, C rank evaluation system)The government established new evaluation system for all Specified Business Operators, which categorizes business operators in accordance with the progress of energy efficiency. Under this evaluation system, the names of the excellent companies are publicized by the government.

3) Expansion of benchmark objectsCommercial sector is included in benchmark objects in order to promote energy efficiency. Benchmark objects used to be limited in industry sector.

4) Exploitation of unused heat sourcesCalculation method for evaluation of energy efficiency has changed so as to promote effective utilization of heat. In the case of using waste heat, business operators get special consideration in evaluating energy efficiency.

For further details of current development, please see the “Regulation on Energy Efficiency and Conservation for the Industry and Commercial Sectors (under the Act on Rational Use of Energy: Energy Conservation Act)”.